GST Update: Rice, Wheat and These Items Won't Attract Tax When Sold Loose; Full List

Amid an uproar over imposing a 5 per cent GST on pre-packaged and pre-labelled items from Monday, finance minister Nirmala Sitharaman on Tuesday said that these items, when sold loose will not attract any GST. The items, which include mostly those needed daily including rice, milk, pulses, etc, are at the moment falling under the ambit of the Goods and Service Tax.

Sitharaman in a series of 14 tweets said that the decision to levy tax on pre-packed and pre-labelled items were taken by the GST Council as a whole and not one member. “The GST_Council has exempt from GST, all items specified below in the list, when sold loose, and not pre-packed or pre-labeled. They will not attract any GST. The decision is of the @GST_Council and no one member. The process of decision making is given below in 14 tweets,” she said.

“Recently, the GST Council in its 47th meeting recommended to reconsider the approach for imposition of GST on specified food items like pulses, cereals, flour, etc. There have been a lot of misconceptions about this that have been spread,” she said, adding a thread to “lay the facts”.

“Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more Rs 2,000 cr on food grain by way of purchase tax. UP collected Rs 700 cr,” Sitharaman said in her tweet.

“Taking this into account, when GST was rolled out, a GST rate of 5 per cent was made applicable on BRANDED cereals, pulses, flour. Later this was amended to tax only such items which were sold under REGISTERED brand or brand on which enforceable right was not foregone by supplier,” Sitharaman said. However, soon “rampant misuse of this provision” was observed by reputed manufacturers and brand owners and gradually GST revenue from these items fell significantly, said the finance minister.

“This was RESENTED by suppliers and industry associations who were paying taxes on branded goods. They wrote to the Govt to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by States,” she said, adding, “The Fitment Committee—consisting of officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana & Gujarat—had also examined this issue over SEVERAL meetings and made its recommendations for changing the modalities to curb misuse.”

“It has been prescribed that GST on these goods shall apply when supplied in “pre-packaged and labelled” commodities attracting the provisions of Legal Metrology Act,” Sitharaman said. “It has been prescribed that GST on these goods shall apply when supplied in “pre-packaged and labelled” commodities attracting the provisions of Legal Metrology Act.”

It must also be noted that items specified below in the list, when sold loose, and not pre-packed or pre-labeled, will not attract any GST, the finance minister clarified.

Here is the List of Items that Will Nit Attract GST When Sold Loose

– Pulses/ Daal

– Wheat

– Rye

– Oats

– Maize

– Rice

– Aata/ Flour

– Suji/ Rawa

– Besan

– Puffed Rice

– Curd/ Lassi

Unanimous Decision by GST Council, Stresses FM

Nirmala Sitharaman in her tweets stressed repeatedly that the decision to levy 5 per cent GST on these items was a unanimous decision by the GST Council, which included ministers from several states, including opposition states. “All States, including non-BJP States (Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana, Kerala) agreed with the decision. This decision of the GST Council is yet again by consensus,” she said.

Further, the GoM that recommended these changes was composed of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa and Bihar and was headed by CM of Karnataka. It carefully considered this proposal, taking into account the tax leakage, added the finance minister, who was bashed earlier by Opposition parties for imposing the tax and thereby burdening the common man.

“To conclude: this decision was a much-needed one to curb tax leakage. It was considered at various levels including by officers, the Group of Ministers, and was finally recommended by the GST Council with the complete consensus of all members,” Sitharaman reasoned.

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